Credit Disputing Tips: 3 Common Mistakes To Avoid

Are You Disputing Credit Issues Correctly?

When is the last time you checked your credit score? Did you click on the box on your credit card page and accept whatever it said? While those can give you a sense of where your finances stand, your credit score is too important to ignore – which is why you should regularly request a complete credit report to check for errors and make corrections. Errors in your credit report can affect your loan eligibility and restrict your housing options, among other consequences, and only you can make corrections.

So what do you do if you discover an error on your credit report? You’ll need to file a credit bureau dispute. Under the Fair Credit Reporting Act (FCRA) you have the right to address potential problems – but you have to go about it correctly, and many people don’t know how. If you’re concerned about an item on your credit report, here are a few things you should know:

Don’t Talk To Lenders

Because of common issues like credit card fraud, most people are used to going directly to the source of a charge when filing a dispute. It typically works when you’re positive you didn’t buy that pair of shoes, but it can leave you in a lurch when it comes to loans.

If you think there’s a problem with a loan, don’t talk to the furnisher first. Though state law typically allows you to dress such problems directly with the source of the loan, doing so can nullify your right to dispute the problem through the credit bureau. Essentially, if you address the issue directly the furnisher and they decide there’s not an issue, you won’t be able to sue them down the line if they decline to investigate based on a bureau complaint. If you start with the credit bureau, though, you have legal recourse.

Document Everything

Because 20% of credit reports contain a problem, you’d think that there would be an easy process for disputing errors, but you can’t just call up the credit bureau and complain. It’s important to put all disputes in writing so that you have a record of the exchange.

In general, you should write a dispute letter to the credit bureau, informing them of any mistakes you’ve detected. From there, the bureau is typically required to investigate the issue within 30 days. In return, they must also give you a response in writing and send you a copy of your credit report if anything changes. Documenting all of this helps to ensure that the error isn’t reinstated on later reports.

Don’t Be Intimidated

Some companies will discourage you from disputing charges or other issues with your credit report by saying it will hurt your credit. Don’t be intimidated – the act of disputing a report alone won’t hurt your credit.

That’s not to say that disputes have no impact on your credit score, but that any changes stem from actual changes to your credit report itself. So if your credit report dispute affects your credit usage, for example, it may result in your score going down – but only if that was helping your score. Alternatively, if disputing something on your credit report eliminates a supposedly unpaid debt, it can help your score. Ultimately, accuracy will help you more in the long term than worrying about which way the dispute will push your score. Consider it a net neutral.

Though knowing how to dispute your credit report with the bureau is an important financial skill, most people get well into adulthood before learning how to do it. Credit bureau disputes should become a normal part of our financial education, but for now, the first step is just to stand up for the facts of your credit history.